Agenda item

The committee is requested to consider the attached report from Ernst & Young LLP summarising the results of work on the Council’s 2016-17 claims and returns.

The committee considered the report attached to the agenda. Mr M Young of Ernst & Young LLP presented the report, advising that this was his last presentation to the committee and that Mr J Jones would be replacing him as the council’s Audit Manager.

Mr Young drew members’ attention to the certification procedures for the Housing Benefits subsidy claim set down by the Department for Works & Pensions (DWP). There was no stated materiality meaning that every error identified from the sample had to be reported. The council paid housing benefit to claimants and claimed a subsidy back from the Government. A number of errors had been established. The first case in the report was the highest monetary value and had resulted from a misclassification on the claim form to the DWP. The DWP allowed an error threshold which, if it was exceeded, would result in the subsidy reverting to 0%. The council was in discussion with the DWP to query this matter and an answer was due shortly.

The indicative fee for 2016-17 had been increased as a result of the additional work done on the housing benefit certification. The auditors were obliged to agree any variations to the fee with the council and with Public Sector Auditor Appointments Limited (PSAA). The same level of error as that experienced two years previously was assumed in setting the fee and related to performing certain procedures. If further errors were found which required testing then the cost for this work would be passed on to the local authority.

From 2018-19 the council had the right to appoint its own reporting accountant. Ernst & Young LLP was in discussion with the council on preparing a tender for that work. The summary of recommendations, agreed action and comment from the council referred to refresher training on housing benefit claims and to a focus on error reduction.

The committee made the following comments and received answers to questions as follows:

·         The council receives subsidy payments monthly.

·         The level of error was higher this year than had been experienced in previous years and higher relative to other local authority claims.

·         The value of errors which impacted claimants was mostly between £1 and £5 and the committee should take comfort from these low value errors.

·         The Revenues and Benefits service was going through a major service review and there may be temporary staff in place. A revised structure would come into force in April 2018 and staff would work towards improving the error ratio.

·         There was no carry over to the next year. The DWP could decide to adjust the council’s subsidy and then a closure letter would be issued.

·         The total value of the error was roughly £190,000 which was about 0.5% of the total value of the claim of £35m. There was concern that any further investigation would not reduce the adjustment to the subsidy claim. Discussions were ongoing between EY, DWP and the council to decide whether we would wish to challenge the qualification. 

Mr Young wished to record his thanks to the council officers for their assistance to him whilst carrying out his audit work.

RESOLVED

That the Certification of Claims and Returns Annual Report 2016-17 be noted.